The formula for Local Fair Share is tweaked year to year. This is the formula for 2018-19.
(Equalized Valuation x 0.013828828) / 2 + (District Income x 0.046200477) / 2
- The weighted average for taxes as a percentage of Local Fair Share : 86.52%
- The unweighted average for taxes as a percentage of Local Fair Share: 94.00%
- The median district's taxes as a percentage of Local Fair Share: 98.45%
That's quite a divergence between the weighted average from the median and unweighted average, isn't it?
A slightly different, but still wide, divergence exists if you look at districts' averages for Local Fair Share per student and median.
A slightly different, but still wide, divergence exists if you look at districts' averages for Local Fair Share per student and median.
- The weighted average for Local Fair Share per student is $12,752.
- The unweighted average for Local Fair Share per student is $31,318.
- The median district's Local Fair Share per student is $13,436.
The reason for these divergences is that a large share of New Jersey's property wealth is concentrated in relative handful of districts, often at the Jersey Shore, that have very few students and tax well below their full Local Fair Shares.
The following 30 districts have the highest Local Fair Shares per student, ranging from $1.9 million per student for Avalon to $62,655 per student for Wildwood Crest Boro.
These 30 districts, who claim only 8,093 students (0.6% of NJ's total) possess $883,083,692 in Local Fair Share, or 5.15% of New Jersey's total Local Fair Share.
So doing the straightforward calculation of weighted average, of dividing the total levy, $14,892,976,955, by the total Local Fair Share $17,213,030,481, produces a skewed result that doesn't reflect the burden that a typical New Jerseyan has for school taxes.
The unweighted average for Local Fair Share per student is skewed by only four tiny districts, Avalon, Mantoloking, Stone Harbor, and Allenhurst, who all have over $1 million in Local Fair Share per student.
***Notice that Millburn and Princeton are not among the districts with the highest Local Fair Shares per student. Millburn's Local Fair Share per student is $35,462. Princeton's is $31,619.
Millburn is indeed the richest K-12 district in New Jersey with a normal age distribution, but the richest K-12 district in New Jersey is Hoboken ($79,106 in LFS per student), not Millburn. However, even Hoboken's wealth is dwarfed by the wealth of microdistricts and non-operating districts at the Jersey Shore plus Harding and Alpine.***
Despite having no need for even a cent of state aid, these ultra-high tax base districts are slated to get $22,939,081 in SFRA aid under Phil Murphy's budget and $1,134,967 in Interdistrict Choice Aid.
That state aid is almost $3000 per student, yet it does not include the state's TPAF payments, teachers Social Security payments, post-retirement healthcare, construction payments, and PreK for Hoboken.
On the other hand, severely underaided districts indeed do have higher taxes. The 109 districts who are underaided by $2000 per student or more pay taxes that are 116.2% of Local Fair Share. Atlantic City, which is now the second most underaided district in New Jersey after Bound Brook, has taxes that are 287% of Local Fair Share ($81,888,890 out of $29,396,657)
The following 30 districts have the highest Local Fair Shares per student, ranging from $1.9 million per student for Avalon to $62,655 per student for Wildwood Crest Boro.
Avalon, Point Pleasant Beach (Mantoloking), Stone Harbor Boro, Allenhurst, Cape May Point, Sea Isle City, Loch Arbour, Longport, Hasbrouck Heights Boro (Teterboro), Long Beach Island, Beach Haven Boro, Spring Lake Boro, Sea Girt Boro, Alpine Boro, Bay Head Boro, Oceanport Boro (Sea Bright), Lavallette Boro, Saddle River Boro, North Wildwood City, Seaside Park Boro, Interlaken, Deal Boro, Cape May City, Margate City, Rockleigh, Hoboken, Englewood Cliffs, Harding Township, Ocean City, Wildwood Crest Boro.
These 30 districts, who claim only 8,093 students (0.6% of NJ's total) possess $883,083,692 in Local Fair Share, or 5.15% of New Jersey's total Local Fair Share.
So doing the straightforward calculation of weighted average, of dividing the total levy, $14,892,976,955, by the total Local Fair Share $17,213,030,481, produces a skewed result that doesn't reflect the burden that a typical New Jerseyan has for school taxes.
The unweighted average for Local Fair Share per student is skewed by only four tiny districts, Avalon, Mantoloking, Stone Harbor, and Allenhurst, who all have over $1 million in Local Fair Share per student.
The bottom line is, use the median if you are going to talk about typical tax burdens or typical tax base per student!
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| In property wealth per student, Hoboken is twice as wealthy as Millburn. (and yet it is an Abbott!) |
Millburn is indeed the richest K-12 district in New Jersey with a normal age distribution, but the richest K-12 district in New Jersey is Hoboken ($79,106 in LFS per student), not Millburn. However, even Hoboken's wealth is dwarfed by the wealth of microdistricts and non-operating districts at the Jersey Shore plus Harding and Alpine.***
However, aside from those handful of ultra-high tax base districts, the tax base is not that concentrated like individual wealth is. You would need to take the 231 most property-rich districts to get 50% of the total Local Fair Share.
But Ultra-Rich Districts Still Get State Aid!!
Despite having no need for even a cent of state aid, these ultra-high tax base districts are slated to get $22,939,081 in SFRA aid under Phil Murphy's budget and $1,134,967 in Interdistrict Choice Aid.
That state aid is almost $3000 per student, yet it does not include the state's TPAF payments, teachers Social Security payments, post-retirement healthcare, construction payments, and PreK for Hoboken.
Tax Burdens in Overaided and Underaided are Similar, Except for the Severely Underaided:
- The median overaided district pays taxes that are equal to 98.6% of Local Fair Share.
- The median underaided district pays taxes that are equal to 98.2% of Local Fair Share.
Even the 85 districts who get $2000 per student or more of their state aid have a median tax burden of 102% of Local Fair Share.
The Abbotts Pay Nowhere Near their Local Fair Share
The median Abbott only pays 56.3% of its Local Fair Share in taxes. Only three Abbotts, Burlington City, Salem City, and Phillipsburg, have taxes in excess of 100% of their Local Fair Shares or even above the state median.
44% of New Jersey's Districts are Not Supposed to Get Equalization Aid
Another facet of NJ's wealth distribution is that 260 districts -- 44% of New Jersey's districts total of 593 -- are not supposed to get Equalization Aid because their Local Fair Shares exceed their Adequacy Budgets (for Equalization Aid). The only direct operating aid these districts get is Special Education Aid, Transportation Aid, Security Aid, and Adjustment Aid.
Another facet of NJ's wealth distribution is that 260 districts -- 44% of New Jersey's districts total of 593 -- are not supposed to get Equalization Aid because their Local Fair Shares exceed their Adequacy Budgets (for Equalization Aid). The only direct operating aid these districts get is Special Education Aid, Transportation Aid, Security Aid, and Adjustment Aid.
The percentage of districts who are not supposed to receive Equalization Aid has gradually increased. In 2009-09, SFRA's first year, only 184 districts - 31% of all in New Jersey - did not receive Equalization Aid.
The ratios of Local Fair Share to Adequacy Budget range from 138:1 for Avalon to 1:13 for Bridgeton.
In the 2020s as New Jersey's pension crisis deepens I expect that the state will want to reduce state aid for districts who do not economically need it.
The ratios of Local Fair Share to Adequacy Budget range from 138:1 for Avalon to 1:13 for Bridgeton.
In the 2020s as New Jersey's pension crisis deepens I expect that the state will want to reduce state aid for districts who do not economically need it.
Most of the Heaviest Tax Burdens are in the Severely Underaided
Although, very broadly speaking, tax burdens in overaided and underaided districts are similar, most (22/30) of New Jersey's most overtaxed districts are underaided.
Heaviest-taxed districts who are severely underaided include Atlantic City (-$7,898 pp for 2017-18), Manchester Regional (-$7,712), Woodlynne (-$4,781 pp), Winfield Township (-$3,261 pp), Lawnside Boro (-$3,638 pp), Linden (-$4,381 pp), Pine Hill Boro (-$2,721 pp) Hi Nella (-$5,900 pp), Ridgefield Park (-$5,093), Newton (-$3,162), Wharton Boro (-$3,792 pp), and Chesterfield (-$4,263 pp).
NJ's most extreme tax burdens are often due to falls in tax base.
Although not every town with an extreme school tax burden is underaided, this is a reminder of how the state needs to step in with additional state aid for severely underaided towns so they can break their cycles of higher taxes > lower property values > higher taxes > lower property values.
It is also a reminder of how many NJ towns are seeing erosion of tax base against inflation and even in absolute dollars.
Although, very broadly speaking, tax burdens in overaided and underaided districts are similar, most (22/30) of New Jersey's most overtaxed districts are underaided.
Heaviest-taxed districts who are severely underaided include Atlantic City (-$7,898 pp for 2017-18), Manchester Regional (-$7,712), Woodlynne (-$4,781 pp), Winfield Township (-$3,261 pp), Lawnside Boro (-$3,638 pp), Linden (-$4,381 pp), Pine Hill Boro (-$2,721 pp) Hi Nella (-$5,900 pp), Ridgefield Park (-$5,093), Newton (-$3,162), Wharton Boro (-$3,792 pp), and Chesterfield (-$4,263 pp).
NJ's most extreme tax burdens are often due to falls in tax base.
- Atlantic City's Equalized Valuation has fallen from $16.16 million to $2.8 billion since 2010.
- Milford's EV has fallen from $146 million to $119 million since 2010.
- Califon's EV has fallen from $153.6 million to $144.6 million since 2010.
- Woodlynne's EV $100.6 million to $68.5 million since 2010.
- Lawnside's EV has fallen from $268.2 million to $213.5 million since 2010.
- Gateway Regional's EV has fallen from $1.05 billion to $897 million since 2010.
- Fredon's EV has fallen from $495.8 million to $433 million since 2010.
Although not every town with an extreme school tax burden is underaided, this is a reminder of how the state needs to step in with additional state aid for severely underaided towns so they can break their cycles of higher taxes > lower property values > higher taxes > lower property values.
It is also a reminder of how many NJ towns are seeing erosion of tax base against inflation and even in absolute dollars.
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